Starting a business? Here’s why you should consider ditching cash!

When your clients set out to start a business there is plenty to think about — what they’re selling, how they’ll market it, suppliers, fulfillment — the list goes on! There are so many steps to starting, running and growing a business that business owners often overlook a simple, but critical component of success: getting paid…

Getting paid is a problem for businesses of all sizes, but it often affects small businesses more as they don’t have the resources (or the time) to spend chasing payments. Plus, it has potential impacts on their ability to pay their bills or re-invest into their operations. This makes choosing a payments acceptance platform, and the types of payments you are going to accept, one of the most important business decisions you’ll make. Consumer behaviour and advancements in technology mean that the payments landscape is changing all the time. We’ve put together the latest so that the next time you sit down with a client you can give them the right advice on getting paid.

Australia is rapidly becoming a cashless society and businesses have much to benefit in moving with this consumer trend ó here are three reasons why.

Consumers don’t like cash

Firstly, not accepting cards or other cashless forms of payment is becoming increasingly rare. Cash only businesses are on the decline. Consumers want speed and convenience when it comes to their purchases; payment mechanisms such as digital wallets are decreasing the time that consumers are spending in line, and increasing the amount of time enjoying their purchase. Card payments remove limitations of carrying enough cash and the inconvenience of going to the ATM.

A consumer behaviour report undertaken by Square in 2018 highlighted that over 80 per cent of Australians now prefer cashless forms of payment, and one in three are actually card-only shoppers who no longer carry any cash at all. This consumer preference for card payments is notsurprising considering that the average consumer only carries $50 in their wallet.

Even the recent removal of ATM fees by our big banks hasnít swayed consumers back towards cash, with the same research revealing 2.5 million Australians reported they hadnít withdrawn money in at least four weeks, and a further 2.3 million stating they couldnít remember the last time they even visited an ATM.

Cash has a cost too

One of the biggest myths that needs to be debunked is that accepting cash payments is ‘free’ for the business owner. The time it takes business owners and staff to have cash ready for trading, prepare daily tills, handle cash transactions, reconcile books and deposit cash each day, can quickly add up.

Squareís report revealed that small and medium-sized businesses (SMBs) were wasting an average of 216 hours per year (thatís almost 29 working days) handling, counting and banking cash. When we consider that the minimum wage for an Australian worker is just over $18, managing cash is costing the Australian SMB sector a minimum of $8.7 billion in annual staff wages.

This is a cost that SMB owners could instead be using to hire more staff, serve their customers better or diversify their product and service offerings.

Businesses that surcharge or implement minimum spends end up driving customers away, or delivering a bad customer experience. Just like renting a business space or hiring employees, accepting payments should also be factored into operating costs –including cash handling. Many people think of cash as being cheaper and easier because thereís effectively no direct cost to them to accept it, therefore it must be free. Our research shows that this isn’t true – processing and handling cash has a very real cost for business owners.

Tech is getting cheaper

Historically, getting setup to accept card payments would often involve an appointment at a bank branch or waiting on hold over the phone, expensive setup fees and ongoing rental costs for clunky hardware. That’s changing, fast. Providers like Square allow you to get setup to take card payments online in minutes. You can purchase hardware outright (for as little as $59 for the Square Reader), online or via a local retailer, and there are no long term contracts or ongoing fees.

The best thing about this shift for business owners is the software and data that is becoming available. Cloud based point-of-sale and payment platforms allow you to gather more detailed data on your sales, inventory, customers and employees. Whether youíre adjusting your menu based on what is selling well or getting an accurate measure onlabour costs, tools like Square track all of this for you – for free. Plus, Square’s integration with Xero means that accounting becomes simple at the end of the month.

So, whether you’re wanting to streamline your business or helping a client get set up, make sure that you’re using the right tools to maximise your return… You might be surprised at how much you can save.

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About the author

Dominic Yap

Australian Strategy and Growth Lead, Square

Dominic is responsible for developing and deploying go-to-market strategies, pricing analysis and industry partnerships for Square, as well as refining operational performance of the products and services across the Australian market.